Charity Bank, the loans and savings bank owned by and committed to serving the social sector, has secured a £500,000 investment from Esmée Fairbairn Foundation as part of its drive to raise share capital.
Having recently raised almost £5 million in subordinated debt, Charity Bank is now focused on attracting an additional £10 million in new equity investment from charities, trusts and foundations. The £500,000 investment from Esmée Fairbairn Foundation comes from converting an existing loan note into share capital and marks the first investment of this new issuance of shares. Charity Bank has grown its loan book by an average of 28% over each of the past four years and this new investment will be used to meet its objective of doubling its lending to charities and social enterprises by 2024 and extending its offering to smaller organisations where the funding gap is most acute.
According to Charity Bank’s State of the Sector report, released last month, the social sector is feeling the pressure of meeting an increase in demand for services, while managing widespread budget cuts. Nearly nine in ten charities and social enterprises expect demand to grow over the next two years, while 82% think it’s going to be difficult to sustain donations over that period. Funding from organisations like Charity Bank is therefore critical to helping deliver their impact. Of the Charity Bank borrowers that took part in its recent social impact study 78% say their project would not have gone ahead without the loan, and 30% said that the financing actually helped to keep their organisation afloat.
Caroline Mason CBE, CEO of Esmée Fairbairn Foundation said: “Charity Bank are a pillar of the social investment landscape, lending to social organisations across the UK and across all impact areas. Charity Bank has proven that lending to charities and social enterprises not only benefits society, but can also be done within an effective business model. We want to help grow the wider social investment market by facilitating the flow of new money into the sector, and we hope to demonstrate with our portfolio, that trusts and foundations’ assets can be invested in a variety of ways to help deliver their charitable aims.”
Ed Siegel, Chief Executive, Charity Bank, said: “For every £1 of capital raised from social investors, we can raise about £7 in deposits from savers and therefore lend approximately £8 to organisations delivering positive social change. In addition to this ‘impact multiplier’ effect, every equity investment we secure is also helping us become a stronger, more vibrant and sustainable institution which can continue responding to the needs of the social sector. This investment from Esmée Fairbairn Foundation, marks the first in a series of equity investments we’re hoping to secure over the next year in order to ensure our continued growth and support for the charities and social enterprises that are improving lives and communities across the UK.”